PRINCE

Citigroup Inc. reduced its third-quarter earnings a day after embattled Chair-man and Chief Executive Charles 'Chuck' Prince quit as the U.S. bank's losses on subprime mortgages and other risky securities climbed.

The latest bad news sent Citigroup shares down 3 per cent to US$36.58 in pre-market trade.

Citi on Monday said it adjusted its earnings to 44 cents a share from the 47 cents reported on October 15.

The New York commercial and investment banking giant said the reduction reflects the lower value of US$43 billion in collateralised debt obligations (CDOs).

Citigroup, which announced Prince's resignation on Sunday, had said it may write off US$11 billion of subprime mortgage losses, on top of a US$6.5 billion write-down already reported last month.

Citi Chief Financial Officer Gary Crittenden said a conference call that the collateralised debt obligations that the bank owns are still generating cash flow as expected, even if their value has declined, and so selling the securities now does not make sense.

Following Prince's resignation, Robert Rubin, a former Goldman Sachs partner and U.S. Treasury secretary who chaired Citigroup's executive committee, was named chairman.

Sir Win Bischoff, who runs Citi's European operations, was named acting chief executive.

In a sign of further uncertainty at the bank, Citi's largest individual shareholder, Saudi Prince Alwaleed bin Talal, told CNBC he favours bringing back Sanford 'Sandy' Weill - the executive who built up Citi through a series of deals - to lead the company on an interim basis.

- Reuters